When an investment house ends plan-document services for micro-business retirement plans, is there an opportunity for third-party administrators?

[Peter Gulia]

In April 2024, Vanguard told customers it was ending recordkeeping and plan-document services for retirement plans served by Vanguard’s Individual 401(k) and other small-business lines. (Many followed Vanguard’s suggestion to transition to Ascensus.)

In 2026, Edward Jones and Morgan Stanley each told customers it will no longer provide plan-document services for “Solo 401(k)” retirement plans.

Do you think these service exits set up a business opportunity for a TPA?

Or, are many micro-business plan sponsors not a good client for a TPA?

What do you look for in evaluating whether you’d accept or decline a one-participant or micro-business plan as your client?

[Paul I]

Too many owner-only plans (OOPs) have been set up solely to give the owner a tax deduction.  Too often, the owner is clueless about services needed to administer the plan properly and to maintain the plan documents.  Further, and perhaps unfortunately for the owner, the owner is not aware of the potential value a plan can have for their type of business and for their personal tax situation.  That  being said, a segment of our business is a group of OOPs where we have an interactive and consultative relationship with the owner and the owner's accountant.  Our clients value our understanding their business, their stage in life, their retirement goals, their tax situation, and our ability to discuss plan strategies that help them achieve their goals.

It does not take much more than having one or two open discussions with the owner about some of these topics to know if the owner will view us as a valuable resource (versus as an unnecessary but required expense of having a plan).

We have relationships with owners that exceed more than 35 years, and we also have turned down many owners who do not see value in having a service provider for their plan.  All in, we enjoy our relationship with the owners we work with and find our relationships to be both gratifying and profitable.

[Peter Gulia]

Others' observations?

[Bill Presson]

We do a lot of owner only plans. We also charge a lot to correct errors when we take over the plans.